One of the most anticipated events within the cryptocurrency field took place just a couple of hours ago. Litecoin went through its block halving which cut the reward that miners get for validating blocks in half – from 25 LTC per block to 12.5 LTC per block. In response, LTC marked a significant increase of around 12% in its value against the USD. It also increased against Bitcoin with an approximate 8 percent immediately after the halving.
Litecoin Halving: What Are The Early Consequences?
Today, August 5th, Litecoin went through its halving event. Among other things, the most substantial consequence is that miners will now receive 12.5 LTC for adding a new block to the network, rather than the previous 25 LTC.
With that transition, the protocol is going to be adding a substantially reduced amount of LTC to the market going forward.
This is perhaps why it sounds much like the interest rate hikes, as well as other measures which are typically initiated by central banks across the world when battling high inflation. The difference, of course, is that, much like Bitcoin’s protocol, Litecoin is also pre-programmed and the inflation is pre-determined, leaving no room for human interference.
Naturally, an event of the kind has an impact on the entire network. It appears, though, that miners didn’t shut off their hashrate after it took place. Commenting on the matter was Charlie Lee, the creator of Litecoin himself.
Since the halving, 12 blocks have been found in 17 minutes.
Seems like miners have not shut off their hashrate at all. Instead, we are mining at a rate of a block every 1.4 minutes on average, which is much faster than the expected 2.5 minutes.
Litecoin network is healthy! pic.twitter.com/xvgefqIPtP
— Charlie Lee [LTC⚡] (@SatoshiLite) August 5, 2019
He outlines that not only are miners not holding off, but they are also mining a lot faster than the expected rate, potentially signaling that the network is healthy and well.
Of course, it’s fairly early to draw conclusions of the kind. That’s why Lee said he will provide updates once more time has passed.
Litecoin Halving And Its Impact on LTC Price
Perhaps the thing that almost everyone was interested in is whether the halving will have an impact on Litecoin’s price. So far, it appears that it did.
As you can see from the chart, Litecoin’s USD value has increased by more than 12% in the past 24 hours, with the majority of the gains coming immediately after the halving. At the time of this writing, LTC is trading at around $102, breaking above the important resistance level of $100. We have yet to see whether it will manage to hold.
Against Bitcoin, the situation also seems quite promising and it appears that the halving catalyzed a positive change in this regard as well.
Trading against BTC, Litecoin gained upwards of 7.5% immediately after the block halving. However, looking at the 24-hour period, it’s important to note that LTC gained only 1% against BTC. This is because its value dropped notably hours before the halving.
We have yet to see how things will turn out, both for Litecoin’s network, as well as for its price. Basic economic principles dictate that if the demand for an asset remains the same or increases while its supply on the market is reduced, the price should go up. Many analysts, however, consider that the halving has already been priced in.